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2020 (1) TMI 560 - AT - Income TaxCarry forward and set-off of unabsorbed depreciation of proprietary concern against partnership firm - claim denied by AO on the ground that the firm cannot claim set-off of unabsorbed depreciation of the proprietary concern - CIT(A) following the decision in the case of the CIT v. Madhukant M. Mehta [1997 (4) TMI 73 - SUPREME COURT] allowed the claim of the assessee since there was a succession by the partnership firm from the proprietary concern and the provisions of the section 78(2) provides for set off of unabsorbed loss/depreciation in cases of inheritance - HELD THAT:- We hold that since the proprietary concern was succeeded by the legal heirs and the proprietary business was carried on by the legal heirs of the deceased by converting the same into partnership firm there is an inheritance of business and therefore, as per the provisions of the section 78(2) assessee is entitled to set-off business loss/unabsorbed depreciation of the proprietary concern against income of the successor partnership firm. Thus, we sustain the order of the CIT(A) and reject the grounds raised by the revenue. Additional ground in respect of expenses/debts which were not claimed in the return of income - HELD THAT:- On hearing both the sides and respectfully following the decision of the Hon'ble Bombay High Court in the case of the CIT v. PRUTHVI Brokers & Shareholders Pvt. Ltd [2012 (7) TMI 158 - BOMBAY HIGH COURT] we restore the claim of the assessee in respect of expenses/debts, to the file of the Ld. CIT(A) who shall decide on merits after providing adequate opportunity of being heard to the assessee. Disallowance @10% of loading and unloading expenses, hawali charges incurred by the assessee - As observing that cash component and element of personal use in the aforesaid expenses cannot be ruled out keeping in view the nature of business of the assessee firm that is transportation, the Ld. CIT(A) sustained the disallowance to the extent of 5% of the expenses as against 10% disallowed by the Assessing Officer. Similarly, for the A.Y. 2014-15 the CIT(A) restricted the disallowance to ₹.2,00,000/- as against 10% disallowed by the AO. We direct the Assessing Officer to restrict the disallowance to ₹.2,00,000/- for both the assessment years i.e. 2013-14 and 2014-15 to meet the ends of justice.
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